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Judgment
Chandra Reddy, C.J.—The validity of Rule 36 of the Spirituous and Medicine Preparations Rules 1345 F. framed under the Hyderabad Abkari Act No. 1 of 1316 F. is impugned in these petitions.
The petitioners manufactured medicines containing, inter alia, alcohol, opium and other narcotic drugs. They have been carrying on this business for some years. In the year 1955, the Parliament passed the Medicinal and Toilet Preparation (Excise Duties) Act (Act XVI of 1955) (hereinafter referred to as the Act) to provide for the levy and collection of duties of excise on medicinal and toilet preparations containing alcohol, opium, Indian hemp and ether narcotic drugs. This Act came into force in the State of Andhra Pradesh an 1st April 1957. Before this date, the petitioners ware given a pharmaceutical laboratory licence under the provisions of the Hyderabad Abkari Act. Subsequent to the Act, the petitioners were granted licence under the provisions thereof for manufacturing marines with contents of alcohol, opium etc. on condition that they should pay duty at the rates specified in the schedule annexed to the Act. For the preparation of these medicines, the State Government supplies alcohol at certain rates. In order to prevent and check the misuse of the spirits and to facilitate the levy and collection of excise duty, the State Government posted to the bonded manufactory of the petitioner-companies supervisory staff and sought to reimburse themselves the expenses incurred by them in this behalf.
The petitioners denied the authority of the State Government to recover the cost of the establishment charges. The Government over-ruled this objection and insisted on the petitioners paying the amount. Hence, the petitioners nave invoked the jurisdiction of this Court under Article 226 of the Constitution for the issue of a writ of mandamus to restrain the Government from collecting those charges.
The contention pressed upon us in support of these petitions is that the Act has repealed the Hyderabad Abkari Act I of 1316 F. and all tile rules framed thereunder and consequently there was no authority inhering in the Government to recover the salaries of the supervisory staff from, the bonded manufactories. This proposition is demurred to by the Government pleader, who argues that the Act has not affected the rules which empower the State Government to collect the establishment charges. It is contended that the State Government has power to post supervisory staff to prevent the diversion of the spirit supplied by them for purposes other than those intended and to recover the cost from the manufactory in that regard.
The first question that arises for consideration therefore is whether the Hyderabad Abkari Act has been repealed in toto by the Act and along with it the rules made thereunder including Rule 36 which is brought into question. For this purpose, we have to bear in mind the scope and ambit of the Act.
It is to be noted that the title of the Act is the Medicinal and Toilet Preparations (Excise Duties) Act, 1955. The object of the Act is to provide for the levy and collection of duties of excise on medicinal and toilet preparations containing alcohol, opium, Indian hemp and other narcotic drugs. Thus, the preamble and the short title of the Act clearly indicate that it deals with the levy and collection of duties of excise. This legislation is ascribable to entry 84 of List 1 of the Seventh Scheduled the Constitution. No State Legislature is competent to make any legislation on this topic and any State laws bearing on that subject are not valid. The Act has repealed all laws corresponding to that Act prevailing in any State. Section 21 of the Act reads:
If, immediately before the commencement of this Act, there is in force in any State any raw corresponding to this Act, that law is hereby repealed:
Provided that all rules made, notifications issued, licences or permits granted, powers conferred under any law hereby repealed, shall, so far as they are not inconsistent with this Act, have the same forte and effect as if they had been respectively made, issued, granted or conferred under this Act and by the authority empowered in that behalf.
It is immediately plain that only such provisions of State law that dealt with the same subject as the Act that were repealed. But a legislative measure, which docs not purport to bear on the levy and collection of excise duties on medicinal and toilet preparations is untouched by the Act. Equally so with regard to rules framed under the local Act.
A comparison of the provisions of the two enactments would reveal that they are not parallel legislations. The Central Act is confined to excise duties on medicinal and toilet preparations whereas the Hyderabad Abkari Act is more comprehensive. It aims at the control and regulation of manufacture and trade in liquors and deriving revenue therefrom- It cannot, therefore, be said that the whole or the State Law corresponds to the Act. No doubt, the Hyderabad Abxari Act contains a provision for the levy of duty on liquor or mohwe flowers in the shape of Section 5. It liquor is interpreted to include any liquid containing alcohol, such as medicinal aid toilet preparation, that portion of the local law will be analogous to the corresponding provision in the Act. As such, in so far as it related to these preparations, that section will cease to have operation. But it continues to be operative as regards the levy of duty on liquor not coming within the range of the Act. It is only excise duties on medicinal and toilet preparations containing alcohol or opium etc, that are allotted to the Parliament under entry 84 of List I, That entry specifically excepts duties of excise on alcoholic liquors ''for human consumption, opium Indian hemp and other narcotic drugs and narcotics from the purview of Parliament. Therefore, a Statute like the Hyderabad Act is within the competence of the legislature of that State. The applicability of Section 5 to medicinal and toilet preparations along has come to an end. in other respects that Section stands. The situation is the same with Section 10, which prohibits again acts without obtaining a licence. This section also sent altogether repealed. It will continue to be applicable to all the acts pertaining to liquors with the exception I of preparations coming within the range of the Act. It follows that except to the extent mentioned above, the whole of the Act remains intact.
The position is similar even as regards rules tram ed under the Act. It is true that if there is any rule which impinges on the levy and collection of excise duties that stands repealed. If, on the other hand, .the rules do not have any impact on that subject, they will continue to be in force.
We have next to consider whether Rule 143 of the Rules made under the Act has the effect of revoking all the rules framed under the Hyderabad Abkari Act. That rule runs as follows:
All rules made under any law corresponding to this Act in force in any state are hereby repealed except as respects things done or omitted to be done before such repeal and every licence granted under any such rules shall be deemed to have been granted in accordance with the provisions of these rules.
It was argued for the petitioners that as the latter rules are made under law corresponding to that Act, they ail stand cancelled. The stand taken by the State Government in this behalf was that Rule 143 is opposed to Section 21. which saves all rules which are not inconsistent with the Act, and as such should be struck down. All the rules including Rule 36 are not in arty way in conflict with The Act and as such they will have the same force and effect as if they have been made under the Act. It is because of this contention that we issued notice to the union Government which appeared through counsel. The learned Advocate for the Government of India contended that having regard to Article 256 of the Constitution, ;t was not competent for the State to question the laws made by Parliament At any rate, by reason of Article 131 of the Constitution, it is only the Supreme Court that could resolve the conflict between a State legislation and Parliamentary legislation We are relieved of the necessity of resolving this controversy as we are satisfied that Rule 143 has no impact on the rule now impugned. We have already observed that except in regard to matters enumerated above, the State Law does not correspond to the Act and the rule in question is not framed under any law corresponding to That Act. For that reason, this rule is not in any way affected by Rule 143. The rule now impeached does not in any way deal with the levy and collection of excise duties. Its purpose is different and distinct from the object of the Act. Hence, Rule 143 cannot come into play and it does not cancel Rule 36.
The only point that survives is whether it was competent for the State Government to make this rule. The rule-making power of the Government is derived from Section 3 of the Hyderabad Abkari Act. u/s 3 (2), the Government has power to frame rules by notification in regard to the matters enumerated thereunder. The Government Pleader seeks to ascribes this rule to Clause (h) which provides for the management and supervision of the stand breweries, liquor shops and ware-houses. According to him, this rule purports to provide for the supervision of liquor shops. It is urged that the expression ''liquor'' includes medicinal and toilet preparations and the expression "shop" can take in pharmaceutical manufactories also. The word ''liquor'' is defined in Section 2 (6) as inclusive of every kind of juice, natural or artificial, which contains alcohol. We are told that the Urdu expression used in the original Act is Arq and it could be translated as every kind or essence. If that were so, 3 medicinal preparation could be described as an essence or liquid containing alcohol. Therefore, a medicinal preparation containing alcohol can be said to satisfy the definition of liquor.
But the further point is whether a bonded manufactory could be regarded as a shop. No doubt, the wore "shop" also bears the meaning of a place or building in which manufacturing or repairing is done or a place where any kind of industry is pursued. But having regard to its context, we think it is used in its ordinary signification a building in which goods are sold." The expression liquor shops is preceded by "stills" and "breweries" which refer to the piece of manufacture. That being so, the legislature could not have intended to convey by this expression a notion of a distillery or a place where liquor is produced. We think it means only a place where liquor'' is sold. This expression must take its colour from the context. We are unable to accept the interpretation placed by the learned Government Pleader on this expression.
However, that need not detain us any further as we are satisfied that this rule could be brought under the residuary clause "any other matter for the purpose of this Act." The purpose of the Act, as we have already pointed out earlier, Is to regulate, inter alia, the trade in liquor. Section 11 prohibits the keeping in possession country liquor or sandhi without obtaining a licence. Similarly, Section 12 prohibits the sale of liquor without a licence As pointed gut supra, the State Government has to supply the manufacturers liquor for the purpose of making medicinal and toilet preparations for which no duty is paid and it is interested in seeing that this liquor is not used tor other purposes such as sale for human consumption, in other words, they have to prevent unauthorised sale of this liquor for consumption. This rule is designed to achieve that object by posting supervisory staff. It may be mentioned here incidentally that though this rule was made in 1936, its validity was not questioned by any of the licensees for the manufacture of medicinal preparations on the ground of its being beyond the rule-making power of the Government and the petitioners themselves had not demurred to the payment of establishment charges for a number of years till the passing of the Act. For these reasons, we are persuaded that this rule was within the rule-making power of the Government. It is not disputed that this rule empowers the Government to make the levy. Consequently, the petitioners cannot question the right of Government to demand the payment of these charges. It follows that no relief could be granted in these petitions.
In the result, these petitions are dismissed with out costs. We fix Advocate''s fee at Rs. 500/- in all these petitions. The fee for counsel for the Union of India is fixed at Rs. 500/-.